Kenyan Banks should fund PPP projects

Kenyan Banks should fund PPP projects

Kenya has over 40 commercial banks and Nine banks that represent regional or foreign banks, whose performance form part of the Kenya Bankers Association (KBA) state of the Banking Industry report 2024 which shows that commercial Banks pre-tax profits rose by 16.1 percent to Ksh. 139.6 billion in 2024. The Banking sector assets surged by Ksh. 1.2 trillion to hit Ksh. 7.7 trillion in 2023, which represents 17.6 percent annual growth. At the same time, deposits grew by 15.1 percent in 2023, driven by mobile and online banking. These successes are being recorded when the public sector is in need of massive resources and finances to fund the national development. According to the African Development Bank (2023), the annual infrastructural financing gap for Africa stands at $130 -170 billion annually. On the other hand, the Bank estimates that the country needs $4 billion sustained annually for ten years for infrastructural financing, which therefore presents an opportunity for the banks to make money in Kenya and Africa through PPPs. There is need for the Kenyan Banks to support the use and operationalization of Public Private Partnerships (PPPs) models, which have been embraced globally since time immemorial for the provision of goods and services. PPPs have been used to bridge the huge financing gap needed for provision of goods and services, and operationalizes a unique set of operating environments where the government provides legal and institutional enabling environment for the successful application of PPPs and the private sector (banks) provide technical expertise, capital and managerial acumen. The PPP option provides more income generating streams for banks.

To make the case stronger, consider that between1990 and 2009, more than 1300 different PPP contracts worth more than 25 billion Euros were implemented; 350 new projects attained financial close by 2007; 2,750 infrastructure projects valued at US$ 786 billion, financed through PPPs between 1990-2003 globally. The World Bank notes that 135 countries are actively using PPPs in diverse areas of economies, 15 countries in East Asia & Pacific region, 21 countries in Europe and Central Asia, 18 countries in Latin America and the Caribbean, Middle East and North African Countries (MENA), 12 countries, South Asia, 6 countries 34 countries in SSA, 29 countries in OECD. The levels of uptake of PPP projects in Kenya have been slow despite its the role in addressing financing, technological, innovation, value for money, and effectiveness of projects in a country. This calls for thorough research, teaching and publications/publicity on PPPs, and the banks can address some of these challenges and generate more businesses, revenues and growth. Dr Giti is an urban management, public – private partnerships (PPP) and environment specialist. mutegigiti@gmail.com , @danielgiti